In fact, there was too much oil, which caused the market to crash in 2014. Market observers and analysts argue that USA energy stocks are in a position to outperform broader equity markets this year, even if oil prices don't move higher.
Oil held gains near $71 a barrel after escalating conflict in the Middle East raised geopolitical risks and as most OPEC members cut output more than required last month.
The reports suggest that US PresidentDonald Trump's decision to reinstate anti-Iran sanctions and Venezuela's plunging oil production will tighten global oil markets further.
Oil prices retreated below multi-year highs hit early in the day on Tuesday, supported by concerns that USA sanctions on Iran that are likely to restrict crude oil exports from one of the biggest producers in the Middle East.
China is crucial to global oil demand growth, and if it keeps its current growth pace, it would support the strong demand growth that analysts expect.
The surge in oil prices comes at a time of tight supply amid record Asian demand and voluntary output restraint by the Organisation of the Petroleum Exporting Countries and non-OPEC producers, including Russian Federation. Production rates are strong, but so too are US demand and fuel exports. Total volume traded was about 37% below the 100-day average. OPEC agreed to slash the output by 1.2 million barrels per day from January 1.
The tightening market has all but eliminated a global supply overhang which depressed crude prices between late 2014 and early 2017. The previous round of sanctions cut Iran's output in half; it is unclear how much will be cut this time.
China's crude oil imports in the first quarter increased by 7 percent on the year to around 9.09 million bpd-a rise of nearly 595,000 bpd on average compared to Q1 2017, according to Reuters calculations.
WTI is now trading above $70.80.
While forecasts vary from "little impact" anticipated by Barclays to losses of 500,000 to 1.5 million barrels a day predicted by BMI Research and consultant FGE, UAE Energy Minister Suhail Al Mazrouei said "don't worry about supply".
"That absolute plunge in Venezuelan production ... just highlights how tenuous the market is in terms of the supply-and-demand balance", said John Kilduff, a partner at Again Capital LLC. Oil and gas accounts for about 40 percent of the Saudi economy and cuts in crude oil production ate into real GDP growth by about 0.7 percent, even as the non-hydrocarbon sector grew by 1 percent a year ago.